The 171 year old British travel
group Thomas Cook has reported a massive half year pre-tax loss of $1.097bn, up from $414mn
reported last year representing 165% increase in losses. The results were
particularly disappointing because the company was able to increase its
revenues from $5.28bn achieved last year to $5.42bn.
The company’s main source of
revenue are the British families, but the country is going through a tough
economic environment and is now, officially, in recession. Its popular African
destinations, including Egypt and Morocco, are going through a political turmoil which has made them a very risky place for European tourists.
The company’s high debt structure and
significant decline in global travelling activity is attributed as the main
reasons. The massive increase in losses, as compared to previous year’s, was due
to a $462mn write down. The business has secured a $2.16bn refinance package that
entitles it to repay its debts in the next three years.
Despite the results, Thomas Cook
is still optimistic about the future. The company is making changes in its
financial structuring and aims to eliminate its losses in the coming years.
The firm plans to improve its
finances, it will raise $512mn by:
1.
Selling its hotel business in Spain
2.
Selling and leaseback arrangements for some
of its aircrafts
3.
Selling all of its Indian operations.
Ms Harriet Green will take over as
the new CEO from July and is expected to
a. “Re-energize”
the business
b. Reduce
the debt levels, considered as the primary obstacle in achieving profitability
c. Improve
the overall customer service experience
Your comments and feedback are always appreciated
Sarfaraz Khan
